Q. How many years back do colleges go when looking at a family’s income in order to determine financial-aid eligibility?

A. The year your high school student transitions from being a junior to a senior is called the base year. The base year is of most interest to the colleges when determining financial-aid eligibility and represents the tax year asked about for both parent and student income on the FAFSA and PROFILE forms.

As an example, for a student who will be a junior in the fall of 2008, the transition to the senior year will occur in 2009, so 2009 is the base year. The FAFSA form should be completed in January of 2010 using the 2009 base-year tax information.

This will progress every year that the student is in college. So for our example when the student is a freshman in college (fall 2010), the FAFSA form will again be completed in January 2011 using 2010 tax information.

The FAFSA asks for only base-year tax information, but the PROFILE form asks for base year as well as the prior year as well as projected income for the following year. The base year remains the most important.

It’s noteworthy that the rule for asset declaration on the FAFSA and PROFILE forms is different than that of income. The base year has nothing to do with asset declaration. The value of assets declared on financial-aid forms should be the current value as of the day the parent and student sign the financial aid forms.

Tom Bottorf is a college funding strategist and founder of nonprofit GetCollegeFunding Inc. For more information about college funding/planning and upcoming seminars at Dana Hills and San Clemente High Schools, visit www.GetCollegeFunding.org. Send your questions to Tom at ocregister@GetCollegeFunding.org.

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